Important points about the classic model, Macroeconomics

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Q. Important points about the classic model?

The most important points about the classic model are as following: 

  • Monetary and fiscal policy can't affect the GDP or unemployment in classical model.
  • In the classical model can no nominal variables affect a real variable. Price level that is a nominal variable, for illustration, does not affect consumption, which is a real variable. It is called classic dichotomy.

 


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